Blame it on these 2 culprits.
According to Barclays Research, the People’s Bank of China's (PBOC) total RMB deposits declined by RMB 257bn in July (vs. –RMB 501bn in July-2012), after seasonal strong growth of RMB 1.6tn at quarter-end in June.
Structure wise, we see outflow from both corporate deposits (-RMB 593bn) and retail deposits (-RMB 394bn).
The main reasons for the seasonal move, in our view, include: 1) effect of wealth management products (WMPs) that are designed to mature at each quarter-end to meet regulatory LDR requirement but rolled over to WMPs at the beginning of July; and 2) tax payment at the first month of each quarter triggering deposits flow from general deposits to fiscal deposits (+RMB 655bn in July).
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